On Friday 24 June 2016, the world awoke to the news that the UK had narrowly voted to leave the EU.
As the dust began to settle on this seismic decision in the days and weeks after, Ireland’s agri-food industry immediately began drawing up contingency plans.
In all the analysis leading up to the Brexit vote, Ireland’s agri-food sector was repeatedly highlighted as the sector that had the most to lose from the UK leaving the EU.
Within the overall agri-food industry, some sectors were more exposed to the UK than others.
In the meat sector, over half of Irish beef and pork was sold to UK buyers every year, while almost 100% of Irish mushroom exports ended up in UK supermarkets and foodservice outlets.
On the dairy side, the UK is an enormously important market for Irish butter, right up there with Germany and the US.
However, it was Ireland’s cheddar cheese industry that found itself most exposed to the UK.
At the time of the Brexit vote, the UK accounted for 115,000t, or almost two-thirds (65%), of Irish cheese exports. In the intervening period, Ireland’s cheese industry has done a remarkable job of lowering its exposure to the UK market.
Irish dairy companies have continued to invest in new cheese processing capabilities that will allow them to target emerging export markets in Asia and the Middle East
While the UK still takes 115,000t of Irish cheese today, Irish dairy co-ops are now shipping around 117,000t of cheese to non-UK markets. This means the Irish dairy industry has found a new home in international markets for an additional 75,000t of cheese.
Despite this impressive progress, the UK still accounted for 50% of all cheese exports in 2018, meaning that significant risks remain for Ireland’s dairy sector should a no-deal Brexit go ahead.
As such, Irish dairy companies have continued to invest in new cheese processing capabilities that will allow them to target emerging export markets in Asia and the Middle East.
However, the demand in these markets is not for cheddar, which has traditionally been the backbone of Ireland’s cheese industry. As a result, Irish dairy co-ops have invested in new processing facilities that will allow them to produce other varieties of cheese.
Diversify
Carbery Group, the west Cork dairy processor, is a perfect example of this diversification. In 2016, Carbery found itself particularly exposed to Brexit as it produced around 50,000t of cheddar annually from its Ballineen factory, accounting for 25% of Ireland’s total cheese output. Much of this cheddar was destined for the UK market.
Carbery's cheese facility at Ballineen, Co Cork.
To lower its exposure to a single market, Carbery announced a significant product and market diversification project, with the co-op investing €78m to diversify cheese production at its Ballineen processing facility. This major investment will allow Carbery to move into processing pasta filata-type cheese offerings, primarily mozzarella, which will be targeted at emerging markets in Asia.
As part of the investment, Carbery worked closely with Enterprise Ireland to scope out what grant aid funding was possible under state aid rules.
The €78m investment at Ballineen is the core part of our diversification plan
Enterprise Ireland approached the European Commission on behalf of Carbery and was able to help the dairy co-op secure approval for the European Commission for the Irish Government to provide €5.57m in state aid funding to build the new facility.
According to Colm Leen, chief financial officer at Carbery, construction of the new mozzarella facility is well under way at Ballineen and should be ready for commissioning in March or April next year ahead of the peak milking season.
“The €78m investment at Ballineen is the core part of our diversification plan,” says Leen. “We’re going to be targeting rapidly growing cheese markets in Asia like China, Japan and Indonesia with our mozzarella range. Global foodservice chains and rising pizza consumption in these markets are driving demand for cheese,” he adds.
In July, Carbery opened its first office in Jakarta, the capital of Indonesia. This footprint on the ground in a market of 264m people, will allow the company to better service new customers in the region for its flavours and dairy nutrition offerings.
R&D investment
Alongside this diversification into new markets and cheese types, Carbery continues to invest in research and development (R&D) as part of its overall business strategy.
“A key component of Carbery’s strategic plan is continued investment in R&D. Effectively, this means driving innovation in our products and processes to create value for our customers,” says Leen.
John Holland, chief operating officer, Carbery Group; Jason Hawkins, chief executive officer, Carbery Group; and Peter Fleming, chair, Carbery board, inspecting plans for the expansion of its production facility at its Ballineen site.
“This R&D work is executed under our three strategic growth pillars of dairy, nutrition and taste.”
Growth plans
“Over the years, Enterprise Ireland has supported Carbery in some of our innovation initiatives as we pursue our strategic growth plans. That support has come by way of funding and occasionally resource assistance in developing our entry to new market geographies,” he added.
According to Leen, this support from Enterprise Ireland has been received under the three broad categories; research, technology and innovation (RTI), business transformation (Lean) and training support.
While Ireland’s dairy sector initially found itself exposed to Brexit through our reliance on the UK market for cheddar exports, the industry has taken decisive action to diversify into new markets while at the same time investing in new cheese production facilities that offer alternatives to traditional cheddar.
In the long run, the significant investments being made by Carbery and other Irish dairy co-ops will stand to the industry and drive exports to faster growing markets around the world.
On Friday 24 June 2016, the world awoke to the news that the UK had narrowly voted to leave the EU.
As the dust began to settle on this seismic decision in the days and weeks after, Ireland’s agri-food industry immediately began drawing up contingency plans.
In all the analysis leading up to the Brexit vote, Ireland’s agri-food sector was repeatedly highlighted as the sector that had the most to lose from the UK leaving the EU.
Within the overall agri-food industry, some sectors were more exposed to the UK than others.
In the meat sector, over half of Irish beef and pork was sold to UK buyers every year, while almost 100% of Irish mushroom exports ended up in UK supermarkets and foodservice outlets.
On the dairy side, the UK is an enormously important market for Irish butter, right up there with Germany and the US.
However, it was Ireland’s cheddar cheese industry that found itself most exposed to the UK.
At the time of the Brexit vote, the UK accounted for 115,000t, or almost two-thirds (65%), of Irish cheese exports. In the intervening period, Ireland’s cheese industry has done a remarkable job of lowering its exposure to the UK market.
Irish dairy companies have continued to invest in new cheese processing capabilities that will allow them to target emerging export markets in Asia and the Middle East
While the UK still takes 115,000t of Irish cheese today, Irish dairy co-ops are now shipping around 117,000t of cheese to non-UK markets. This means the Irish dairy industry has found a new home in international markets for an additional 75,000t of cheese.
Despite this impressive progress, the UK still accounted for 50% of all cheese exports in 2018, meaning that significant risks remain for Ireland’s dairy sector should a no-deal Brexit go ahead.
As such, Irish dairy companies have continued to invest in new cheese processing capabilities that will allow them to target emerging export markets in Asia and the Middle East.
However, the demand in these markets is not for cheddar, which has traditionally been the backbone of Ireland’s cheese industry. As a result, Irish dairy co-ops have invested in new processing facilities that will allow them to produce other varieties of cheese.
Diversify
Carbery Group, the west Cork dairy processor, is a perfect example of this diversification. In 2016, Carbery found itself particularly exposed to Brexit as it produced around 50,000t of cheddar annually from its Ballineen factory, accounting for 25% of Ireland’s total cheese output. Much of this cheddar was destined for the UK market.
Carbery's cheese facility at Ballineen, Co Cork.
To lower its exposure to a single market, Carbery announced a significant product and market diversification project, with the co-op investing €78m to diversify cheese production at its Ballineen processing facility. This major investment will allow Carbery to move into processing pasta filata-type cheese offerings, primarily mozzarella, which will be targeted at emerging markets in Asia.
As part of the investment, Carbery worked closely with Enterprise Ireland to scope out what grant aid funding was possible under state aid rules.
The €78m investment at Ballineen is the core part of our diversification plan
Enterprise Ireland approached the European Commission on behalf of Carbery and was able to help the dairy co-op secure approval for the European Commission for the Irish Government to provide €5.57m in state aid funding to build the new facility.
According to Colm Leen, chief financial officer at Carbery, construction of the new mozzarella facility is well under way at Ballineen and should be ready for commissioning in March or April next year ahead of the peak milking season.
“The €78m investment at Ballineen is the core part of our diversification plan,” says Leen. “We’re going to be targeting rapidly growing cheese markets in Asia like China, Japan and Indonesia with our mozzarella range. Global foodservice chains and rising pizza consumption in these markets are driving demand for cheese,” he adds.
In July, Carbery opened its first office in Jakarta, the capital of Indonesia. This footprint on the ground in a market of 264m people, will allow the company to better service new customers in the region for its flavours and dairy nutrition offerings.
R&D investment
Alongside this diversification into new markets and cheese types, Carbery continues to invest in research and development (R&D) as part of its overall business strategy.
“A key component of Carbery’s strategic plan is continued investment in R&D. Effectively, this means driving innovation in our products and processes to create value for our customers,” says Leen.
John Holland, chief operating officer, Carbery Group; Jason Hawkins, chief executive officer, Carbery Group; and Peter Fleming, chair, Carbery board, inspecting plans for the expansion of its production facility at its Ballineen site.
“This R&D work is executed under our three strategic growth pillars of dairy, nutrition and taste.”
Growth plans
“Over the years, Enterprise Ireland has supported Carbery in some of our innovation initiatives as we pursue our strategic growth plans. That support has come by way of funding and occasionally resource assistance in developing our entry to new market geographies,” he added.
According to Leen, this support from Enterprise Ireland has been received under the three broad categories; research, technology and innovation (RTI), business transformation (Lean) and training support.
While Ireland’s dairy sector initially found itself exposed to Brexit through our reliance on the UK market for cheddar exports, the industry has taken decisive action to diversify into new markets while at the same time investing in new cheese production facilities that offer alternatives to traditional cheddar.
In the long run, the significant investments being made by Carbery and other Irish dairy co-ops will stand to the industry and drive exports to faster growing markets around the world.
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